Witness Testifies He Laundered Funds From Smuggling

December 12, 1986|By DAVID GIBSON, Staff Writer

As president of DeVoe Enterprises, one of James Malone`s duties was to turn dirty money into clean money, but he was on the job for about two years before he realized the money was derived from cocaine smuggling operations, he testified in court Thursday.

Malone, a former reporter for The Miami Herald and WPLG-TV Channel 10 in Miami, started working for Jack DeVoe in 1979 after he told DeVoe that ``he was tired of the newspaper business and wanted to make some big money,`` DeVoe testified earlier this week.

Both men are among those testifying at the Palm Beach County Jail on behalf of the prosecution in the cocaine smuggling and racketeering trial of Jose Antonio ``Pepe`` Cabrera-Sarmiento.

Cabrera is accused of being the leader of a Colombia-based smuggling ring that imported 16,000 pounds of cocaine, worth more than $1 billion, into the United States between June 1982 and November 1983.

DeVoe, Malone and Cabrera were among 42 people indicted by a statewide grand jury, accused of participating in the ring. DeVoe was charged with running the transportation organization that brought cocaine from Colombia to the United States for distribution.

Both DeVoe and Malone testified against Cabrera as a part of a plea agreement with the state. DeVoe has served 34 months of an eight-year sentence. Malone was sentenced to probation and community service, given a new identity, and placed in a witness protection program.

Malone, 44, said he began working for DeVoe in late 1979.

``At some point later, during early 1980, I became general manager of DeVoe Airlines, DeVoe Aviation and, later on, DeVoe Marine,`` Malone said. ``Later, all those were placed in a holding company called DeVoe Enterprises that I was president of.

``I was also paid to assist (DeVoe`s) tax attorney in preparing a criminal defense and paid to launder his money,`` Malone said.

Under cross-examination from defense attorney Joe Mincberg, Malone said it was not until 1982 and his first meeting with Cabrera that he realized the money came from smuggling operations.

``I knew (DeVoe) had been involved in marijuana smuggling before, but he told me he had retired,`` Malone said.

Mincberg, who is seeking to discredit the witnesses against Cabrera, asked, ``The fact that you kept $150,000 in cash in your desk drawer, it didn`t dawn on you?``

Malone said he was concentrating on development of the legitimate businesses under the DeVoe Enterprises umbrella and that the smuggling possibilities did not occur to him.

He said he did notice that DeVoe regularly carried large sums of cash and he investigated ways to convert it to other forms.

In one case, DeVoe and Malone decided to charter their own bank on the island of Anguilla, Malone said.

``In most cases, it involved arranging through other parties for cash to be exchanged for money in foreign bank accounts, to be brought back into the U.S. as if a loan or from some other source than DeVoe,`` Malone said.

State prosecutors say that in one scheme, DeVoe located a person in the Bahamas who wanted to bring money into the United States. They worked out a dollar-for-dollar swap in which DeVoe`s money was deposited in the Bahamian`s account in the United States while the Bahamian deposited money in an account for DeVoe there, prosecutors said.

Malone then arranged for an attorney, ostensibly representing legitimate investors but actually using money from DeVoe`s account, to lend the money to legitimate businesses operated by DeVoe in the United States, they said.

That scheme allowed DeVoe to receive the apparently legitimate capital in the United States, and also deduct the supposed interest payments on the loan from his taxes, they said.